- Lawyer Bill Morgan sided with the SEC in its concerns over crypto exchanges co-mingling customer funds.
- Morgan said crypto exchanges often use the same platform for multiple roles, such as exchanges, broker-dealers, and custodians.
- The lawyer said customers should also be concerned about how crypto exchanges manage their assets.
Lawyer Bill Morgan, in a recent tweet on X (formerly X), said the U.S. Securities and Exchange Commission’s (SEC) criticism of crypto exchanges mixing customer funds is justified. Morgan said that while consumers can’t trust the SEC, the fact that crypto exchanges use one entity for multiple roles is also a concern. Indeed, the lawyer noted that some exchanges use the same platform as exchanges, broker-dealers, and custodians.”
The lawyer’s comments came in reaction to a push by fellow crypto lawyer John Deaton to get community members to join Kraken’s case as amicus curiae (friends of the court). According to Deaton, joining the case is a way to let the court know the regulator does not speak for all consumers in making its case.
In a separate tweet, Morgan clarified that the argument is not in support of the SEC’s “politically motivated” regulatory push against crypto. Instead, he said it is to outline “the risks to consumers that will continue to run rampant without a suitable regulatory framework for crypto.”
Morgan’s statements highlight existing regulatory concerns over crypto assets and issuers, which heightened following multiple institutional crashes last year. This year, the U.S. became one of the countries where regulatory scrutiny increased, with the SEC acting more cautious.
The Wall Street regulator has so far initiated lawsuits against leading crypto firms like Coinbase and Binance and continued actions against Ripple and Grayscale. Meanwhile, Binance recently threw a white flag in its tussle with the regulator.
As earlier reported, the crypto exchange pleaded guilty to money laundering allegations. Long-time CEO and co-founder of Binance, Changpeng Zhao, will step down, and the exchange will pay fines to settle the charges.
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